Canadian regulators and crypto platforms coordinate to disrupt fraud

TORONTO – Members of the Ontario Securities Commission (OSC) joined agencies from across the country to conduct a coordinated operation to warn victims of crypto fraud that they may have lost – or may soon lose – some of their assets.

Operation Avalanche, which was led by the British Columbia Securities Commission (BCSC), brought together securities regulators, police agencies, crypto trading platforms and blockchain analysis firm Chainalysis on March 11 and 12 to:

• Find compromised wallets on the Ethereum blockchain
• Identify the owners of those compromised wallets, and
• Warn the owners of the threat, so they can take steps to prevent further losses.

During the operation, 89 victims were contacted by telephone or email. Through those interactions, participants in the Operation also gained information that could aid regulators and law enforcement in their investigative and disruptive efforts against online investment fraud.

“Proactive and innovative approaches are crucial in disrupting fraud,” said Bonnie Lysyk, OSC Executive Vice President, Enforcement. “By staying ahead of emerging threats and leveraging advanced technologies, we can protect investors and maintain the integrity of our financial markets."

Operation Avalanche focused on a specific tactic used by online fraudsters called “approval phishing,” in which individuals are tricked into granting access to a wallet on the Ethereum blockchain. By granting approval, the victim – often unknowingly – allows the fraudster to withdraw crypto from their wallet.

Operation Avalanche – which included the BCSC, Alberta Securities Commission, the Autorité des marchés financiers, the Delta Police Department, the Vancouver Police Department, the RCMP and the U.S. Secret Service – is another example of how various agencies at the local, provincial, federal level, along with agencies in other countries, are collaborating to disrupt cryptocurrency scams orchestrated by transnational organized crime.

The participating crypto trading platforms, all of which are registered to operate in Canada, were:

• Netcoins Inc.
• Ndax Canada Inc.
• Coinbase Canada Inc.
• Wealthsimple Investments Inc.
• Shakepay Inc.

Kraken and Coinsquare also provided information as part of the Operation.

You can learn more about Operation Avalanche, crypto investment fraud, how to prevent becoming a victim, and what to do if you’ve already been victimized to avoid further losses on the OSC website.

The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair, efficient and competitive capital markets and confidence in the capital markets, to foster capital formation, and to contribute to the stability of the financial system and the reduction of systemic risk. Investors are urged to check the registration of any persons or company offering an investment opportunity and to review the OSC investor materials available at https://www.osc.ca.

– 30 –